Denied A Personal Loan Despite A 700+ Credit Score? Here’s What Really Happened

Many borrowers with good credit scores are confused right now. They have strong repayment records, regular jobs, and decent salaries, yet banks are turning them down.

Take a case from Surat. A man with a credit score of 738 applied for a ₹2 lakh personal loan in June 2025. Clean record, salaried income, zero defaults. Still rejected. No clear reason given.

Banks are becoming more selective. The Ministry of Finance’s March 2025 report showed that public sector banks reduced their NPAs to just 2.58%, down sharply from 9.11% in 2021. After years of cleanup, lenders don’t want fresh risks.

Then came the Reserve Bank of India’s November 2023 circular. It made personal loans costlier for banks by raising risk weights. So, lenders became cautious. Even those with 700+ credit scores started facing rejections.

Good Credit, Still Denied? Understand What Banks Now Care About

Lenders are now asking more questions. How stable is the job? How many EMIs are running? Is the income regular or seasonal?

Sometimes, even freelancers with high income and 750+ scores are being told no. Why? Because the income isn’t fixed. One month high, one month dry, not something banks like.

Here’s how it’s playing out:
 

This DTI thing is becoming a silent filter. Nobody says it out loud, but it decides the outcome.

LoansJagat explained it best: a good credit score helps, but it’s no longer enough. Today, lenders look closely at Debt-to-Income (DTI) ratios. Cross 40%, and your file may quietly die.

Why Are Banks Rejecting Even High-Score Borrowers?

Even professionals with credit scores above 750 are being turned down. A software engineer with a steady income was denied because of multiple existing loans.

At the same time, the Fintech Association for Consumer Empowerment (FACE) revealed that NBFCs issued 10.9 crore personal loans in FY 2024–25. The market is heating up, and lenders are slowing down to manage risk.
 

So, yes. Someone with 710 can get approved while someone with 750 may not. It’s not just about the number anymore.

What Changed After RBI’s 2023 Policy?

In 2018–19, rejections mostly came after defaults or low scores. Things were simpler. Now, even a high score needs support from income proof, steady job, fewer loans, and sometimes just plain luck.

The IL&FS crisis back then made lenders alert. But the RBI wasn’t forcing changes. In 2023, it did. That’s why this shift feels different. Not just market-driven, it’s policy.

Conclusion 

Anyone applying now must check more than their credit report. EMI pattern, job stability, number of enquiries, all of it matters.

Feels like a full background scan, not just a score check. Even a 740 score won't help if your EMI load crosses 40 percent. That’s how it is now. Risk has many names, and banks are reading all of them.